SPY|QQQ Tuesday 4PM 8/06/2024

August 6, 2024 4 min read

Market Sentiment Analysis:

Overall Market Sentiment:

SPY (S&P 500 ETF):

The SPY 30-minute intraday chart over the past 30 days reveals significant insights:

Recent 13 Bars Price Volume Development: In the last 13 bars, SPY showed some volatility with increased volume. Particularly, there was a notable price drop from around 527.03 to 521.97 in the bar at 15:30 on August 6, 2024, which saw exceptionally high volume (16469955).
Volume Trends: Volume has spiked notably in the past few bars, indicating potential distribution phases and uncertainty in the market.
Moving Averages: If applying a short-term moving average (say 5-period), it seems that SPY might be trending downwards given the recent sharp declines.
Notable Price Movements: The price has dipped below previous support levels, recovering slightly but staying below critical resistance.

QQQ (Nasdaq-100 ETF):

For QQQ, the past 30 days and the recent 13 bars show:

Recent 13 Bars Price Volume Development: QQQ showed a downward trend. From a high of 447.0700 to a low of 439.420, there’s a definitive downtrend in the recent bars, accompanied by high volume (7995534).
Volume Trends: High volumes during drops indicate possible panic selling or distribution.
Moving Averages: The short-term moving average would probably confirm a downtrend based on the recent bar movements.
Notable Price Movements: QQQ struggled to hold the key levels around 444-446, breaking systematically below each support.

VXX (Volatility Index ETF):

VXX highlights rising market volatility:

Significant Spikes/Drops: There was a significant spike reaching 73.99 before pulling back to 66.75. This indicates heightened fear and uncertainty.
Impact on SPY and QQQ: This spike in VXX could correlate with the recent drops seen in SPY and QQQ, suggesting increased hedging and/or panic selling in the broader market.

Sector Analysis:

Examining sector ETFs over the past 30 days reveals sector rotations and strong/weak performers.

Strong Sectors: XLU (Utilities) has been relatively strong, holding support to some extent compared to other sectors. XLP (Consumer Staples) shows resilience as well.
Weak Sectors: XLK (Technology), XLI (Industrials), and XLY (Consumer Discretionary) showed weaker performances, particularly with notable declines.
Sector Rotation Implications: There’s a clear rotation into defensive sectors like Utilities and Consumer Staples, indicative of risk-off sentiment prevailing among investors.

Key Levels to Watch:

SPY:

Key Support: Around 521.97 – Close below this level could trigger further declines.
Key Resistance: Around 528.90 – Breaking above could mean recovery and further uptrend.

QQQ:

Key Support: 439.42 – Critical to hold this level to avoid a further downturn.
Key Resistance: 447.07 – Needs to break and hold above for bullish sentiment.

Scenarios:

Bullish Scenario:

SPY: A break above 528.90, accompanied by strong volume and positive economic data or earnings report, could propel SPY upwards.
QQQ: Positive earnings from key tech stocks and maintaining above 447.07 with strong volume could push QQQ higher.

Bearish Scenario:

SPY: Falling below 521.97 on significant volume, driven by negative news such as geopolitical tensions or poor economic data, could initiate a substantial correction.
QQQ: A break below 439.42 supported by increased volume and decreasing investor confidence in growth/technology sectors could see accelerated declines.

Overall Commentary:

The market currently exhibits short-term bearish sentiment, as evidenced by the recent price declines and volume spikes in SPY and QQQ. Increased volatility (VXX) suggests uncertainty and fear among investors, further pushing sector rotations into defensive areas like Utilities and Consumer Staples. Key support levels are being tested, and failure to hold these levels could lead to a more significant market correction. Traders should stay vigilant for news and technical breakouts within the described scenarios.

Charts to support the analysis: